Effective Wealth Creation Needs An Effective Strategy
To Create Wealth Effectively You Need An Effective Strategy.
Our aim is for you to take control of your financial affairs. Taking control requires having an effective strategy.
Growing Wealth
Your wealth is important. Whether you created it, inherited it or manage it on behalf of your family, people trust you to make the most of it. So, it is no wonder that you have high expectations. You want to preserve your wealth, to make it grow and use it to the benefit of those you care for. This then is your challenge – and your objective. To make the right decisions for the people you protect and nurture and whose future is your responsibility.
Wealth Strategy
A MIDAS Wealth Strategy is a comprehensive strategy for safeguarding and building wealth, addressing “big picture” issues such as:
- What are the values and ethical principles that guide your life?
- What are your financial objectives?
- When do you need to reach your objectives?
- How much do you have to invest now or incrementally, as time goes by?
- What are the main risks to your wealth?
- What ownership structures provide the best protection for your wealth?
- What are the most effective options to maximise my wealth that are available to you?
A MIDAS Wealth Strategy converts your answer to these questions into quantitative terms to measure the impact of inflation, taxation, fees and rates of return. Various options are modelled and tested to calculate which option (or combinations of options) will most efficiently achieve your financial objectives.
Furthermore, a MIDAS Wealth Strategy establishes your current financial position, measures your financial capacity, determines your objectives, calculates the impact of taxation and other risks on your wealth and models and compares the strategic options that are available to you.
A wealth strategy provides the confidence and certainty that the plan that you are following will meet your objectives both in good and bad times.
Investment Strategy
Whereas a Wealth Strategy considers “big picture” issues, an Investment Strategy outlines the specific strategies that an investor needs to implement in order to achieve their objectives.
A MIDAS Investment Strategy considers the impact of current and forecast economic and market conditions on your personal financial situation and recommends a mix of assets and specific investments that will achieve your objectives with the lowest amount of risk. An Investment Strategy addresses issues such as:
- What are the current and forecast economic and market conditions? What is the best-case scenario? What is the worst-case scenario?
- What net (after expenses) rate of return do my income-generating assets need to generate to reach my financial goals?
- What amount of risk (i.e. volatility) is implied in the required rate of return?
- What is the recommended mix of assets (i.e. asset allocation)? Why?
- What are the specific investments being recommended? Why?
An investment strategy uses economic and financial principles to define the tactical plan by which you can most efficiently achieve your financial objectives. The tactical plan applies the principles of diversification, asset allocation, volatility and the risk/reward ratio to design the best mix of assets (i.e. stocks, bonds, cash, real estate, etc) to produce the best return with the lowest risk.
A fully effective investment strategy needs to reflect your personal objectives, values and ethics, provide for your liquidity requirements; and calculate the investment risk parameters that are most appropriate for your circumstances.
A MIDAS Investment Strategy will provide you with a sound tactical plan to follow and stick with, even when you see your investments fluctuate during a time of market volatility.
How to Prepare an Effective Investment Strategy
Fund Managers and Superannuation Trustees are required by law to prepare an Investment Strategy, so why do ordinary, non-professional investors often take a casual, unplanned approach?
When formulating and documenting your strategy, you should consider the following issues:
- What are the financial objectives of the portfolio?
- The risk and potential returns of holding and realising each asset.
- Cash flow requirements to meet operational expenses and expected drawdowns.
- Costs and benefits of diversification, as well as the risks associated with inadequate diversification.
- Level of liquidity at any given time to purchase assets, take up corporate actions or fund drawdown requirements.
- Ability to discharge existing and prospective liabilities, such as taxes, loan payments, etc.
An Investment Strategy is like a flight plan for your financial situation. It should define the objectives you want to achieve and specify the strategies and methods by which the investment objectives will be met.
When formulating and documenting your strategy, you should consider the following issues:
- What are the financial objectives of the portfolio?
- The risk and potential returns of holding and realising each asset.
- Cash flow requirements to meet operational expenses and expected drawdowns.
- Costs and benefits of diversification, as well as the risks associated with inadequate diversification.
- Level of liquidity at any given time to purchase assets, take up corporate actions or fund drawdown requirements.
- Ability to discharge existing and prospective liabilities, such as taxes, loan payments, etc.
About Us
Objectives of the investment strategy
Investment objectives need to be reasonably specific and detailed. As a minimum, your objectives should refer to the target amount, which is the number of investments that are required at a certain point in time. Generally, most investors are wanting to achieve financial independence, which is defined as the amount of income-generating assets required to generate sufficient income to meet the costs of the expected lifestyle. However, some investors prefer to invest for more specific purposes, such as funding school fees, purchasing a home or starting a business.
Investment Service
Developing a comprehensive investment strategy to achieve investment objectives
Once the investment objectives of the portfolio have been defined, the next step is to convert them into quantitative terms so that the various options can be modelled and compared. The financial models need to include dates and amounts of income or capital drawdowns. The timing of a capital drawdown can significantly affect the results.
MIDAS Ethical
A comprehensive investment strategy designed to achieve the objectives needs to address the following as well:
Impact of volatility. Usually, investment returns are modelled using the amount of volatility experienced over the last 10-15 years in order to determine what level of volatility (known as market risk) generates the best performance over the specified time frame.
Impact of taxation. A tax-free investment with low returns may outperform a highly-taxed investment that generates a high return.
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MIDAS Financial is proud to deliver dynamic, dedicated strategic financial planning that makes a big difference to your financial future.